Negligent Credentialing is Now Actionable in Kentucky

Spalding v. Spring View Hospital, LLC, — S.W.3d — (Ky.App. 2016), 2016 WL 929507

The Court of Appeals of Kentucky has recently allowed patients to sue hospitals for negligent credentialing of physicians.

As a historical matter, Illinois was first to recognize negligent credentialing as a cause of action against hospitals: Darling v. Charleston Cmty. Mem’l Hosp., 211 N.E.2d 253 (Ill. 1965). Between 1965 and now, more than half of the states have followed the Darling decision. This development was driven by the shift in hospital ownership and management from small, charitable organizations to for-profit corporations. Courts and legislatures responded to this shift by abolishing the charitable immunity that shielded charitable hospitals against suit in order to protect charitable assets against dilution. For Kentucky’s charitable immunity, see Cook v. John N. Norton Mem’l Infirmary, 202 S.W. 874, 875 (1918); and for its abolition, see Mullikin v. Jewish Hosp. Ass’n of Louisville, 348 S.W.2d 930 (Ky. 1961).

Many courts across the nation have also recognized negligent hiring, negligent supervision, and corporate negligence as actionable torts. Kentucky, for example, came to recognize each of these causes of action. See, e.g., Ten Broeck Dupont, Inc. v. Brooks, 283 S.W.3d 705 (Ky. 2009); Turner v. Pendennis Club, 19 S.W.3d 117, 121–22 (Ky.App. 2000); Oakley v. Flor–Shin, Inc., 964 S.W.2d 438, 442 (Ky.App. 1998) (cited with approval in Spalding). In parallel, courts ruled that hospitals are generally not liable for malpractice committed by doctors working as independent contractors with attending privileges. As attested by the court in Spalding, “This remains the law in Kentucky, and [we] will not disturb that well-founded rule today.” This rule, however, “does not bar relief on a claim of negligent credentialing.” Spalding, id.).

The Spalding court’s decision to recognize negligent credentialing of physicians as an actionable tort rested on the following reasons:

“[The defendants] offer various policy-based arguments against recognition of negligent credentialing under this and other common law theories. They first contend that such a cause of action would negatively, even disproportionately, affect rural hospitals’ ability to recruit doctors and would result in a broader “chilling effect” on the participation of credentialing committee members due to concerns of personal liability. While we do not take these concerns lightly, they are nonetheless too speculative and tenuous to bar recognition of the tort under the facts presented to us in these appeals. …

[The defendants] also argue that subjecting healthcare facilities to liability for credentialing decisions would add to the already exorbitant cost of healthcare in Kentucky and would effectively make hospitals the insurers of the physicians with which they have merely contracted. This would be true if we were proposing to hold hospitals vicariously liable for the negligent actions of their independent contractors. That is not what is proposed. Rather, the tort we are asked to recognize … would impose liability upon a hospital for its own decision to credential a physician the hospital knew or reasonably should have known was incompetent. Thus, hospitals would be liable for, and would insure themselves against, only their own negligence. This is not a novel or irrational concept, nor is it necessarily bad public policy. In fact, it is a standard to which our laws and courts hold other individuals, other professionals, and other corporations.

[The defendants] also express[] concern that, if combined and tried with medical malpractice claims, negligent credentialing claims could give rise to the introduction of potentially irrelevant or prejudicial evidence concerning a physician’s background or a credentialing committee’s decision-making process. Among the present facts, [the treating physician’s] history of chemical dependency best exemplifies this potential problem. However, we are confident that faithful application of the Rules of Evidence, especially those concerning relevance, would provide sufficient protection regarding this concern.”